Courtesy of Benzinga.
Arcos Dorados Holdings Inc. (NYSE: ARCO) announced certain guidance today with respect to its expectations for third quarter 2011 results.
On a constant currency basis, the Company’s sales growth for the third quarter of 2011 improved upon the growth the Company experienced in the first half of the year. As evidence of this trend, the Company expects its systemwide comparable sales growth in the third quarter of 2011 to be within a range of 14.8% to 16.2%, as compared to the same period in the prior year.
However, in light of certain factors which have affected its results in prior periods and which it has previously reported, the Company expects its net income for the third quarter of 2011 when compared to the net income for the third quarter of 2010 to be negatively impacted by:
an increase in compensation expense related to the outstanding awards granted under the Company’s long-term incentive plan (in light of the increase in the current quoted market price of the Company’s class A shares (based on a closing price of $23.19 per share as of September 30, 2011, compared to $21.09 as of June 30, 2011)),
certain one-time charges associated with the partial redemption of the Company’s 2019 Notes, and
the depreciation of certain local currencies against the U.S. dollar during September 2011, which primarily generated a non-cash charge over certain balance sheet accounts. This depreciation was offset, in part, by gains from certain foreign currency derivative transactions.
The Company also expects that its effective tax rate for the third quarter of 2011 will be higher than its effective tax rate for the first half of 2011 as a result of several factors, including (i) the partial recovery of its valuation allowance related to its deferred tax assets during the first half of 2011 and (ii) withholding tax and additional expenses of its holding company.
As a result of these factors, for the three months ended September 30, 2011, the Company anticipates that its revenues will likely range from $970 to $990 million, its operating income will likely range from $69 to $75 million and its net income will likely range from $18 to $20 million, representing an approximately 23.0% to 25.5% increase, an approximately 0.4% to 9.1% increase and an approximately 38.2% to 31.3% decrease, respectively, as compared to the three months ended September 30, 2010.
